Valuation for Insurance Purposes

Insurance valuation services are usually required to establish the amount of insurance required for the purposes of establishing cover or determine the sum to be paid following loss or damage as a result of an insured peril.

The Dancing House Also nicknamed “The Drunk House”, is a downtown office building in Prague, in the Czech Republic, and was designed by Czech architect Frank Gehry

Often there can be confusion between the market value of a building and the reinstatement value following a catastrophic loss. On one hand, the value of the site cannot be discounted as it still exists in most cases but in addition the site must be cleared, waste removed, architects and engineers engaged, local authority permission sought, fire certificates granted etc. and all this takes time.

In the past few years in Ireland, we have a seen huge changes in values attributed to property. Many owners, managers and landlords are reviewing their insurance premiums to make savings where it can be demonstrated that their buildings may now be overvalued for insurance purposes. Most policies provided for an annual increase in line with inflation, which had rocketed during an era of rapid capital growth and low interest rates.

When carrying out an insurance valuation, we first measure the building, using Net Internal Area (NIA) when measuring office or retail property. This is the useable area within a building measured to the internal face of the perimeter walls at each floor level. Gross Internal Area (GIA) is the area measured to the internal face of the perimeter walls at each floor level. There is an extensive range of inclusions and exclusions that also need to be taken into account during the measuring process that address the specific areas of a building. Gross External Area (GEA) is generally used for building cost estimation and is the preferred method of measurement for calculating building costs of residential property for insurance purposes. Party walls in shared ownership should be measured to their party line.

Shanghai Minhang district a 13 story building in “Lotus River Garden” Residential collapse

Most cost price indices do not include a provision for wardrobes, carpets fixtures and fittings, which are normally covered under a separate contents cover.

Blackdoor Property use a range of up to date published indices such as building costs guides, construction purchasing & orders indexes to accurately assess price movements and costs associated with construction. More recently, the cost of fuel and VAT increases have demonstrated some cost inflation acceleration within an environment of minimal new construction starts and civil engineering project declines.

Even though the cost of construction is at historic lows even a small pick up in general economic activity would reflect in increased build costs. This is important factor to acknowledge in pricing as the lead-time from property loss to reconstruction can be 12 to 18 months in some cases and the loss may occur in the eleventh month of the policy so you may need to plan for a claim cost in 24 to 30 months.

If we can be of assistance when assessing your insurance cover please contact us at valuation@blackdoor.ie or call us on 01 6767177.

 

Household Charge & Non Principal Private Residence tax

Who is Liable?

Household Charge : Owner of the property or the tenant if it is a lease of more than 20 years.

NPPR:     Owner of the property or the tenant if it is a lease of more than 20 years.

Property

Household Charge: Applies to principal private residence in addition to any rental properties. The amount applies to each residential unit if the property is subdivided.

NPPR:     All residential property not used as owners main residence. The amount applies to each residential unit if the property is subdivided.

Amount

Household Charge: €100

NPPR:     €200

Installment Options

Household Charge: €25 per quarter – apply by 1 March in the year of assessment

NPPR:     Not available

Payment Date

Household Charge: 31 March each year

NPPR:     30 June each year

Penalty

Household Charge:

Late payment fee of:

–          10% up to 6 months late

–          20% between 6 – 12 months late

–          30% beyond 12 months late

–          Additional interest charge of 1% per month (12% annual)

NPPR:     €20 per month

Tax Deductible

Household Charge: Not deductible against rental income

NPPR:     Not deductible against rental income

Notification

Household Charge: Notification via leaflet.

NPPR:     No postal notification. Email notification only if previously paid online

 

We’re happy to be of assistance if you would like any further advice alternatively the NPPR website is here & Household Charge website here

 

Stamp duty on property

Stamp duty is charged on the instruments used in the transfer of property – in other words, the conveyance documents that transfer the ownership of the property.

Residential property
Budget 2011 changed the rules on stamp duty on residential property (such as houses, apartments etc.). These changes took effect in respect of instruments executed on or after 8 December 2010. The rates were reduced and all existing reliefs and exemptions were abolished.

For people who entered into a binding contract to purchase a residential property before 8 December 2010, there is a transitional provision to ensure that they do not lose out if they execute the transfer of that property before 1 July 2011 – see ‘Transitional provision’ below.

Non-residential property
Stamp duty is also payable on land/housing sites without residential buildings. Where your agreement to buy a site is linked to a construction contract, stamp duty may be payable on the full amount of the site plus the construction contract.

Residential property: on or after 8 December 2010

From 8 December 2010 onwards, the only factor affecting the amount of stamp duty is the value of the property.

New rates
For properties valued up to €1 million, the new rate is 1% of the full value. For properties valued over €1 million, the rate of 1% applies to the first €1 million and a rate of 2% applies to the balance. The new rates apply to instruments of transfer dated on or after 8 December 2010.

Abolition of exemptions and reliefs
All existing reliefs and exemptions for stamp duty on residential property were abolished in respect of instruments executed on or after 8 December 2010, as follows:

First-time buyer relief
Exemption for new houses up to 125 sq m in size
Relief on new houses over 125 sq m in size
Consanguinity relief for residential property transfers
Exemption for residential property transfers valued under €127,000
Site to child relief
This means that many transactions which would have qualified for exemptions or reliefs under the old system will not now qualify.

However, if you were in the process of buying a property on 8 December 2010, and you would be disadvantaged if the new rules were applied, you may be able to avail of a transitional provision, which allows the old rules to apply for your benefit.

Transitional provision
A transitional provision will ensure that anyone who entered into a binding contract to purchase a residential property before 8 December 2010, and who executes the transfer of that property before 1 July 2011, will not lose out. In order to benefit from this provision, you must ensure that the instrument contains the following certificate:

“It is hereby certified that this instrument was executed solely in pursuance of a binding contract entered into prior to 8 December 2010”.

More details on the Budget changes are available in the leaflet published by the Revenue Commissioners.

Residential property: before 8 December 2010

Prior to Budget 2011, the amount of stamp duty payable varied according to the value of the property (home or apartment, land or housing site) and your status (first-time buyer, investor, etc.). Stamp duty was divided up into different categories and rates and the amount you had to pay depended on:

Whether, as an owner-occupier, you were a first time buyer
Whether you were an owner-occupier or an investor
Whether it was a new or second-hand house or apartment
The size of the house or apartment.
Whether there was a relationship or association between the vendor and purchaser
The price of the property
Whether your parent(s) transferred a site to you
First-time buyer exemption
Up to 8 December 2010, first-time buyers who were owner-occupiers of new and second-hand residential property did not pay stamp duty. Budget 2011 abolished this exemption with effect from 8 December 2010 in respect of intruments dated on or after this date.

A first-time buyer is defined as a person (or where there is more than one buyer, each person):

Who has not on any previous occasion, either individually or jointly, purchased or built on his or her own behalf a house in Ireland or abroad
Where the property purchased is occupied by the purchaser (or a person on his or her behalf) as his or her only or principal place of residence
Where no rent (except under the Rent a Room Scheme) is derived from the property for up to 2 years after completion of the purchase (for instruments dated on or after 5 December 2007) – see ‘Clawback of stamp duty relief’ below.
As a divorced or separated person, you could be considered a first-time buyer if you met the following conditions:

It was the first house purchased by you following the separation or divorce
You had left your former marital home
You did not retain any interest in the marital home
Immediately prior to the date of the judicial separation, deed of separation, decree of divorce or decree of nullity you were not entitled to an interest in a house other than the marital home
At the date of the judicial separation, deed of separation, decree of divorce or decree of nullity, your separated or former spouse must be living in the house which was occupied by you both before your separation or divorce.
Non-owner-occupiers and investors
People who rent out new or second-hand houses or apartments are considered investors. Under the rules in force up to 8 December 2010, the same rates of stamp duty applied to investors as to non-first-time owner-occupiers – see ‘Rates’ below.

As the relief for first-time buyers has now been abolished, all buyers now pay the same rates, based only on the value of the property being bought.

Exemption for new houses up to 125 sq m in size
Prior to Budget 2011, owner-occupiers of new houses/apartments were exempt from stamp duty, provided that the area of the house or apartment did not exceed 125 sq. metres (1,346 sq. feet) and a Floor Area Compliance Certificate had been issued. The house or apartment must not have been occupied prior to its purchase. It had to be occupied as the owner’s main place of residence for a certain period from the date of the purchase deed – i.e. you could not derive rent from the property other than under the ‘Rent a Room’ scheme. This period was originally 5 years but was reduced to 2 years on 5 December 2007. However, if you sold the house during this period you did not have to pay stamp duty. Budget 2011 abolished this exemption with effect from 8 December 2010.

Relief on new houses over 125 sq m in size
If the area of the house or apartment was greater than 125 sq. metres (1,346 sq. feet), some stamp duty was payable if the Chargeable Consideration was above the relevant exemption threshold. The stamp duty was assessed on either the cost of the site or 25% of the cost of the site plus the building costs (less VAT), whichever was the greater figure, depending on the contractual arrangements given effect by the deed of transfer. This figure was called the Chargeable Consideration. Budget 2011 abolished this relief with effect from 8 December 2010.

Transfer of property between related parties
Up to 8 December 2010, stamp duty was payable at half the normal rate applicable if there was a transfer of property (other than shares) to certain relatives (for example, a parent, grandparent, step-parent, child, brother, sister, half-brother, half-sister, aunt, uncle, niece or nephew). This relief was not available on leases or on transactions involving cousins and/or in-laws.

Budget 2011 abolished this consanguinity relief with effect from 8 December 2010, but only as it applied to residential property. It continues to apply to non-residential property.

Exemption for properties under €127,500
Up to 8 December 2010, you did not have to pay stamp duty when buying a property for less than €127,500. Budget 2011 abolished this exemption with effect from 8 December 2010.

Site transfers from parent to child
Up to 8 December 2010, stamp duty did not apply where a parent transferred a site to a child.

The site had to be for the construction of the child’s principal private residence and the market value of the site could not be greater than €500,000 for disposals made on or after 5 December 2007.
A parent could only transfer one site to each child to take advantage of this exemption.
The area of the site had to be less than 1 acre (0.4047 hectare), exclusive of the area occupied by the house itself.
Budget 2011 abolished this exemption, known as site to child exemption, with effect from 8 December 2010.

Other rules

Clawback of stamp duty relief
A stamp duty clawback arises where rent, other than under the ‘Rent a Room scheme’ is obtained within the 2-year period (or up to the date of a sale during this period) from the date of the purchase deed. The amount of the clawback is the difference between (a) the stamp duty payable at the higher rates which would have applied at the date of the purchase deed and (b) the lower duty (if any) paid as a result of getting the benefit of the reduced stamp duty rates.

For purchase deeds dated before 5 December 2007 the clawback period was 5 years. Where a property was purchased before 5 December 2007 but was rented on or after that date, there is no clawback of stamp duty relief if it is rented in the 3rd, 4th or 5th year of ownership.

Under the ‘Rent a Room scheme’, there is no stamp duty clawback where rent is received by the person in occupation of the house or apartment on or after 6th April, 2001 for letting of furnished accommodation in part of the house.

Farm consolidation relief
There is a special stamp duty relief for farmers who sell some agricultural land and purchase more agricultural land in order to consolidate their holdings and improve the viability of their farms. The current scheme applies to instruments executed between 1 July 2007 and 30 June 2011.

Full details, including the qualifying conditions, are set out in Revenue’s Stamp Duty Farm Consolidation Relief (pdf) leaflet.

Rates

From 8 December 2010
The following rates of stamp duty apply to all residential property:

On and after 8 December 2010
Property value Rate
Up to €1,000,000 1%
Balance 2%
Transitional arrangements ensure that anyone who entered into a binding contract to purchase a residential property before 8 December 2010, and who executes the transfer of that property before 1 July 2011, will not lose out.

Before 8 December 2010
Up to 8 December 2010, stamp duty rates were as follows (subject to the relevant reliefs and exemptions):

Property value Rate
Up to €125,000 Exempt
Next €875,000 7%
Balance 9%

Non-residential property
Rates of stamp duty on land/housing sites without residential buildings have not changed:

Property value

Rate
Up to €10,000 Exempt
€10,001 – €20,000 1%
€20,001 – €30,000 2%
€30,001 – €40,000 3%
€40,001 – €70,000 4%
€70,001 – €80,000 5%
Over €80,000 6%

How to apply

Your solicitor will calculate how much stamp duty is due and request this from you prior to the closing of the sale. The amount is paid to the Revenue Commissioners who place a stamp on the property deeds. Without this stamp, the deeds cannot be registered.

Where to apply

National Stamp Duty Office
New Stamping Building
Dublin Castle
Dublin 2
Ireland
Locall:1890 482582
Homepage: http://www.revenue.ie
Email: dublinstamp@revenue.ie

New Standards Regulations for Rented Houses: The Housing (Standards for Rented Houses) Regulations 2008 SI 534/2008

New Standards Regulations for Rented Houses:
The Housing (Standards for Rented Houses) Regulations 2008
SI 534/2008

What are the Housing (Standards for Rented Houses) Regulations 2008?

• Minimum standards for rental accommodation are prescribed by means of regulations made under section 18 of the Housing (Miscellaneous Provisions) Act, 1992. These regulations specify requirements in relation to a range of matters such as structural repair, absence of damp and rot, sanitary facilities, heating, ventilation, light and safety of gas and electrical supply.

• All landlords have a legal obligation to ensure that their rented properties comply with these regulations and responsibility for the enforcement of the regulations rests with the relevant local authority supported by a dedicated stream of funding provided from part of the proceeds of tenancy registration fees collected by the Private Residential Tenancies Board.

• These standards are currently set out in the Housing (Standards for Rented Houses) Regulations 1993 (S.I. 147/1993). From the 1st of February 2009 new updated regulations will govern standards for rental accommodation. These regulations are called the Housing (Standards for Rented Houses) Regulations 2008 (S.I. 534/2008).

When will the new regulations come into effect?

• Certain aspects of the proposed revised standards could necessitate significant refurbishment works and, consequently, significant capital investment by landlords. Therefore certain aspects of the new Regulations – those dealing with sanitary facilities (Article 6), heating facilities (Article 7) and food preparation, storage and laundry (Article 8 ) – will not come into effect until the 1st of February 2013 for existing rental properties in order to allow landlords time to make the necessary remedial improvements.

• As such, where a property has been let at any time from the 1st of September 2004 to the 31st January 2009 it will be deemed to be an “existing tenancy” for the purpose of the Regulations and Articles 6, 7 and 8 will not come into effect for that property until the 1st February 2013. These properties will continue to be governed by Articles 6 and 7 of the 1993 Regulations until the 1st of February 2013.

• The remaining parts of the new standards will be introduced immediately and will take effect from the 1st February 2009. Notwithstanding the timing outlined above, all provisions of the new regulations will be applicable immediately for any rental properties being let for the first time after the 1st February 2009.

What are the key features of the new Regulations?

Structural Condition – Article 5
• All rental accommodation must be maintained in a proper state of structural repair. This means that the dwelling must be essentially sound, with roof, floors, ceiling, walls and stairs in good repair and not subject to serious dampness or liable to collapse because they are rotted or otherwise defective.

Sanitary Facilities – Article 6
• All rental accommodation must contain the following self-contained sanitary facilities:
o Water closet (toilet), with wash hand basin adjacent to it supplied with hot and cold water
o Fixed bath or shower, supplied with hot and cold water

• These facilities must be provided in a room separate from other rooms by a wall and door and contain separate ventilation. In effect, this will result in the phasing-out of the traditional “bedsit”, where sanitary facilities are shared between different rental units.

Heating Facilities – Article 7
• All habitable rooms must contain a fixed appliance (or appliances) capable of providing effective heating. The tenant must be able to control the operation of the heating appliance. (A habitable room is a room used for living or sleeping in but does not include a kitchen having a floor area of less than 6.5 m².)

Food Preparation and Storage and Laundry – Article 8
• All rental accommodation shall contain the following self-contained facilities:
• 4 ring hob with oven and grill
• Provision for the effective and safe removal of fumes to the external air by means of cooker hood or an extractor fan
• Fridge and freezer
• Microwave oven
• Sink with a draining area
• Adequate number of kitchen presses for food storage purposes
• Washing machine within the dwelling unit or access to a communal washing machine facility within the curtilage of the building
• In cases where the accommodation does not contain a garden or yard for the exclusive use of this accommodation, a dryer must be provided.

Ventilation – Article 9
• All habitable rooms must have adequate ventilation, maintained in good repair and working order. Kitchens and bathrooms must be provided with adequate ventilation for the removal of water vapour to the external air.

Lighting – Article 10
• All habitable rooms must have adequate natural lighting; all rooms (including every hall, stairs and landing) must have a suitable and adequate means of artificial lighting. Emergency lighting, linked to fire alarm systems, must be provided in all units within a multi-unit building.

Fire Safety – Article 11
• It is proposed to distinguish between multi-unit dwellings and rental units which do not form part of a multi-unit dwelling.

(i) Multi-unit dwellings will be required to contain a mains-wired smoke alarm, a fire blanket, emergency lighting in common areas and an emergency evacuation plan.
(ii) Rental units that do not form part of a multiple unit must have a fire blanket and either a mains-wired smoke alarm or at least two 10-year self-contained battery-operated smoke alarms.

Refuse Facilities – Article 12
• The revised regulations will require access for tenants to proper, pest and vermin-proof refuse storage facilities. The use of communal storage facilities, where appropriate, will be considered to comply with the regulations.

Electricity and Gas – Article 13
• Installations in the house for electricity and gas supply must be maintained in good repair and safe working order. There must also be, where necessary, provision for the safe and effective removal of fumes to the external air.

Do the regulations apply to all rental accommodation?

The revised regulations will apply to all rental accommodation with the exception of the following:
• holiday homes
• accommodation provided by the HSE or an approved body containing communal sanitary, cooking and dining facilities. This kind of accommodation usually houses people with disabilities or the elderly and provides support for people with special needs who require assistance to live in the community
• demountable (e.g. mobile homes) housing provided by a housing authority
• accommodation let by a housing authority or an approved housing body will be exempt from the requirements for food preparation, storage and laundry purposes. In this kind of accommodation the tenant usually provides these goods, retaining ownership of them when they move to new accommodation.

Do the regulations apply to listed buildings?

• Listed buildings were covered by the 1993 regulations and will continue to be required to meet the requirements of the new regulations. The owner or occupier of a protected structure is entitled to ask the planning authority to identify works that would, or would not, require planning permission in the case of their particular building. Landlords will be advised to contact the conservation officer in the local authority for advice when considering undertaking works.

How will the new Regulations be enforced?

• Responsibility for the enforcement of the regulations rests with the relevant local authority. Local authority inspectors inspect rental properties for the purpose of ensuring they comply with the regulations and where a property does not comply, can engage a series of sanctions against a landlord up to and including prosecution in the District Court.

• The Department of the Environment, Heritage and Local Government provides significant resources, from part of the proceeds of tenancy registration fees collected by the Private Residential Tenancies Board, to assist local authorities in discharging their functions under the Housing Acts in relation to rented accommodation. Over €3m was provided in 2007 and a further €4m has been earmarked for this purpose for 2008.

• It is a matter for each individual local authority to decide the specific details of its enforcement strategy and inspection arrangements. However, in discharging their responsibilities in relation to the rental sector, authorities have been asked to have regard to the Good Practice in Housing Management: Guidelines for Local Authorities – Standards in the Private Rented Sector: Strategic Planning, Effective Enforcement published by the Centre for Housing Research in November 2007, which makes a range of recommendations on relevant issues, including targeting inspection activities.

Property Tax

It seems clear that we have begun the transition from a transaction based property tax to a recurrent property tax system. So what is in store for an owner or occupier of property in Ireland? Who will the burden fall on and who will it be passed on to? Are the introductory rates set to be the thin end of the wedge? The ESRI recently suggested that a property tax rate of .4% of value would raise in the order of €1 billion per annum however it would also be apparent that affordability in terms of income  is also a critical aspect of the new tax. When the property market was in better shape and significant stamp duties were paid by those who bought property in recent years, should there be an offset?

An extract from the Commission of Taxation 2009 report on the taxation of property.

Land or site value tax

6.1 Introduction

A land or site value tax is a recurring tax on the land or site value of a property. No tax is levied on the buildings or improvements that are on the land or site. It is therefore different from other property taxes, and commercial rates, where tax is generally applied to the capital or rental value of the property. The basic principle of site or land valuing is that land is valued according to its optimal potential use as defined by the planning authorities. Therefore, a land value tax on a site on which a building is permitted would reflect that value. The tax liability remains the same whether or not a site is utilised in accordance with its planning permission.

6.2 Overview

We consider that there is a sound economic rationale for considering the introduction of a land or site value tax if the problems – outlined below – associated with the practical aspects of its implementation could be addressed. Many of its economic advantages – it is far less distortionary than stamp duty; encourages the productive use of all land; provides for a stable revenue base; and discourages the

Flow of capital out of more productive areas of the economy into residential construction activity- also underpin our decision to recommend an annual property tax based on capital value.

A land value tax in Ireland may have merit when property registration is recorded under a single system which applies nationally (and no ‘unregistered title’ to land remains) and when all registered property is mapped and a system of valuation can be put in place and is regularly updated.

We consider that, if a land value tax policy proposal were pursued, it would take a number of years to become established and would involve a long and sustained challenge for policy-makers to inform the community of its benefits and to implement the proposal. We therefore recommend that a land or site value tax should not be pursued at this stage.

6.3 Analysis

The basic principle of site or land valuing is that land should be valued according to its optimal potential use as defined by the planning authorities. Therefore, a land value tax on a site on which a building was permitted would reflect this value and hence may encourage the development of land that would not otherwise be developed, or may encourage the earlier development of land.

The site or unimproved land would then form the basis of a property tax. The tax liability remains the same whether a site is left derelict or fully utilised. The principal benefit of a land value tax is the penalty it imposes on a failure to put land to its most efficient use.

It has been argued that the economic case in favour of a land value tax rests not merely on the penalty it imposes on leaving a site vacant or derelict, but on the fact that all suboptimal land use is penalised. However, it would place an additional cost on developers who acquire lots piecemeal for eventual consolidation into a single large development and who allow the existing structures to deteriorate while waiting to consolidate the entire site.

Because the land value tax is based on a valuation where the land or site is valued according to its most remunerative potential use as defined by the planning authorities, it is argued that it can provide a means through which the community or government can tax the benefit that private landholders receive as a result of public or community investments (such as rezoning decisions or the provision of transport infrastructure to an area). NESC, for example, suggests that it could recoup some of the value created by particular transport investments, such as LUAS or a Dublin Metro.

6.4 Practical considerations: implementation and design of a land value tax

The application of a land value tax on a national, regional or local basis would require a single register of land owners that clearly identifies the land owner, where the site is located and a valuation system that can apply a valuation to the site. These are major challenges.

In technical terms this involves the development of what is known as a cadastre – a comprehensive mapped register of all properties including details of ownership, precise location, dimension and value of all individual parcels of land. The development of a cadastre to form an accurate basis for a land value tax would, in Ireland, require co-operation between a number of public bodies.

Determining an accurate valuation of the site value of land for land value tax purposes would, in our view, be a difficult exercise due to the requirement to distinguish the site value from the value of buildings and improvements. Decoupling the site value from the overall property value would present difficulties. To establish practices and procedures that are acceptable to all would, undoubtedly, take some considerable time to bed down.

One of the most significant challenges presented by a land value tax proposal is the issue of fairness. Taxpayers would consider it very unfair if the same amount of tax was payable in respect of two properties of different sizes, simply because they were located on identical parcels of land. Whilst economically such an outcome might be reasonable we consider that most taxpayers would consider it to be inequitable. Capital values have the advantage of being clearer and more relevant to most householders and business people. In our view, not many people would be familiar with the value of the land on which their property is located.

It is also unclear to us whether a tax based on what could be construed as a theoretical value of the site rather than a value of the property on that site would necessarily be seen as progressive or proportionate.

We are also concerned that a land value tax would involve issues of complexity in valuation which could be a significant obstacle to its implementation. At its most basic level, a land value tax could be applied through measurement of the area covered by the ground of a home. Such a basis of valuation would not be sophisticated enough to take account of factors that might influence the value of land locally, such as the provision of schools or transport links or proximity to tourism attractions.

The inclusion of such adjustments, which are necessary for a land value tax, would complicate the valuation process and would be very difficult to communicate to home-owners and land-holders.

We acknowledge that a number of possible methods exist that could be used for the valuation of land parcels for the purpose of a land value tax. However, we consider that no basis of valuation can provide the value of direct and demonstrable supporting evidence that can be presented by using capital values.

The value of land-only transactions is not available in Ireland. Therefore, valuation for the purposes of land value taxation would have to:

  • Establish House sales data
  • Identify the building value and disregard it
  • Identify values relation to the size and location of the land.

This is a difficult process and in our view would be likely to lead to much uncertainty about both the definition of land value and the way the value has been calculated.

In addition, the valuation of buildings in multiple occupation or ownership would be problematical. The value for the site of the building would have to be assessed and apportioned among each of the occupiers in the building. Variations in value would arise from different uses within a building (e.g. retail use on the ground floor, office use on the first floor and residential use on the top floor). Whilst there may be robust evidence for capital values relating to such properties, evidence for site values or the apportionment of site values would be most likely either unobtainable or not readily agreed.

Conclusion

We can see an economic rationale for land value tax. However, we consider that it may not be a pragmatic approach to the restructuring of our property taxation system in the context of the operational difficulties of introducing it and communicating its benefits to home-owners and landholders. We therefore conclude that a land value tax should not be pursued at this stage.

More Information from The Commission on Taxation

Residential Tenancies Act 2004

The following is a quick guide to Residential Tenancies Act 2004

Scope (Part 1)

The Act applies to the mainstream private rented sector so it does not apply to:
• owner-occupied accommodation
• social housing
• the formerly rent-controlled sector
• long occupation equity tenancies
• business lettings
• holiday lettings
• “rent a room” or other arrangements whereby the landlord also resides in the dwelling

However, it will apply to rented dwellings where the landlord’s spouse, child or parent is a resident and a lease or written tenancy agreement has been signed. The security of tenure provisions do not apply to employment-related and ‘section 50’ student accommodation.

Tenancy Obligations (Part 2)

Tenants must:
– pay the rent and any other specified charges,
– avoid causing or make good any damage beyond normal wear and tear,
– notify the landlord of any repair requirements,
– allow access for repairs to be carried out and by appointment for routine inspections,
– keep the landlord informed of the identity of the occupants
– not engage in or allow anti-social behaviour,
– not act, or allow visitors to act in a way that would invalidate the landlord’s insurance,
– not cause the landlord to be in breach of statutoryobligations,
– not alter, improve, assign, sub-let or change the use of the dwelling without written consent from the landlord.

Landlords must:
– allow the tenant to enjoy peaceful and exclusive occupation,
– carry out repairs, subject to tenant liability for damage beyond normal wear and tear,
– insure the dwelling, subject to the insurance being available at a reasonable cost,
– provide a point of contact,
– promptly refund deposits unless rent is owing or there is damage beyond normal wear and tear,
– reimburse tenants for expenditure on repairs that were appropriate to the landlord,
– enforce tenant obligations, – not penalise tenants for making complaints or taking action to enforce their rights.

These respective obligations must be adhered to whether or not there is a lease or written agreement – landlords and tenants cannot contract out of them. Additional obligations, however, can be included in a lease.

If the landlord does not enforce the tenant’s obligations, any other person who is adversely affected as a result can bring a complaint to the Private Residential Tenancies Board (PTRB) about the failure. Prohibited anti-social behaviour includes behaviour that interferes with other people’s peaceful occupation as well as more serious behaviour that causes fear, danger, injury, damage or loss.

Rents (Part 3)

Rent may not be greater than the open market rate and may be reviewed (upward or downward) once a year only unless there has been a substantial change in the nature of the accommodation that warrants a review. Tenants are to be given 28 days notice of new rents.
Tenant may ask their landlord to review the rent if they feel it exceeds the market rate for the property – if more than a year has elapsed since the last rent review, tenants may seek a review. Disputes about any aspect of rent may be referred to the PTRB.

Security of Tenure (Part 4)

Security of tenure is based on 4-year cycles from the date Part 4 of the Act comes into force (i.e. 1st September 2004).
The landlord can terminate without specifying grounds during the first 6 months, but once a tenancy has lasted 6 months, the landlord will be able to terminate that tenancy (known as a “Part 4 tenancy”) during the following 31/2 years only if any of the following apply;
– the tenant does not comply with the obligations of the tenancy
– the dwelling is no longer suited to the occupants accommodation needs (e.g. overcrowded)
– the landlord intends to sell the dwelling in the next 3 months
– the landlord requires the dwelling for own or family member occupation
– the landlord intends to refurbish the dwelling – the landlord intends to change the business use of the
dwelling.

The grounds for recovery of possession listed above are subject to certain procedures to prevent their abuse.
At the end of the 4 years, a new tenancy will commence and the cycle begins again on the same basis as outlined above. The following are other key features of Part 4 tenancies:

• Tenants may opt to continue in occupation after a fixed term tenancy that has lasted 6 months or more expires, but they must notify the landlord of an intention to remain, between one and three months before the fixed term lease is due to expire.
• Where a tenancy is assigned to a new tenant (i.e. transferred with the landlord’s consent), a new tenancy cycle will commence.
• Where a tenancy is sub-let (i.e. tenant moves out and becomes landlord to a new sub-tenant with the landlord’s consent), the sub-tenancy will be deemed to have commenced on the same date as the head-tenancy out of which it was created, and the cycle will continue. Further detail relating to sub-tenants is contained in the Schedule to the Act.
• In the case of multiple occupants, the cycle will run with the earliest tenant and Part 4 protection will, therefore, last less than 4 years for those who join in at a later stage. Multiple occupant tenancies will continue for the full four years so long as there is at least one person who is a tenant of the Part 4 tenancy in occupation (not necessarily one of the original tenants).
• Licensees (i.e. additional occupants brought in by a resident tenant who are not tenants themselves) may request the landlord to become tenant and the landlord may not unreasonably withhold written consent.
• The tenant will be free to terminate the tenancy at any time, subject to any fixed term lease or agreement.

Tenancy Terminations (Part 5)

Tenancies will be terminated by means of a notice of termination, regardless of why the termination is happening. If the termination is by the landlord and the tenancy has lasted more than 6 months, one of the 6 reasons above must be cited. Tenants do not need to give a reason for terminating.

The notice period to be given depends on the length of the tenancy as follows:
Shorter notice periods apply where termination is for non- compliance with tenancy obligations (7 days for serious anti-social behaviour, 28 days for other breaches) and the parties may also agree a shorter notice period at the time of termination (but not earlier). Longer notice may be given, but not more than 70 days where the tenancy has lasted less than 6 months.

Duration of Tenancy 

 

Notice by Landlord 

 

Notice by Tenant 

 

Less than 6 months 

 

28 days 28 days
6 or more months but less than 1 year 

 

35 days 35 days
1 year or more but less than 2 years 

 

42 days 42 days
2 years or more but less than 3 years 

 

56 days 56 days
3 years or more but less than 4 years 

 

84 days 56 days
4 or more years 

 

112 days 56 days

 

Where a landlord refuses consent to assign or sub-let a fixed term tenancy, the tenant may terminate the tenancy before the expiry of the fixed term.

Dispute Resolution (Part 6)

Disputes arising between landlords and tenants are generally to be referred to the PRTB instead of the courts. Examples of disputes that will be dealt with by the Board include issues relating to; deposit refunds, breaches of tenancy obligations, lease terms, termination of tenancies, market rent, rent arrears, complaints by neighbours regarding tenant behaviour, etc. Either the landlord or tenant can initiate the process.

The person who initiated the process will have to pay a fee (to be decided by the PRTB) which will not be expensive. Legal representation should not be necessary as the dispute resolution process will operate informally and is intended to minimise expense and stress for all parties concerned. Cost of legal or other professional representation at PRTB proceedings will not be awarded except in exceptional circumstances as determined by the Board.

The dispute resolution process consists of two stages:

• Stage 1: Either mediation or adjudication as chosen by the parties and is confidential.
• Stage 2: A public hearing by a three-person Tenancy Tribunal.

A mediated agreement or the decision of an adjudicator or of a Tribunal will result in a determination order of the Board. A Tribunal decision may be appealed to the High Court on a point of law only. The enforcement of determination orders of the Board that are not complied with will be through the Circuit Court.

The Board may award damages of up to €20,000 and arrears of rent of up to €20,000 or twice the annual rent, whichever is greater (but a maximum of €60,000 applies to rent arrears awards). Cases involving amounts greater than these will have to be taken through the courts. The Board will have power to apply to the courts for injunctive type relief in the case of very serious emergency cases coming before it, e.g. illegal evictions, threat to life, etc.

Registration of Tenancies (Part 7)

Landlords will have to register details of all their tenancies with the PRTB but from the commencement of the new registration system will no longer have to register with local authorities. The Board will use the registration data for its information provision function and for resolving certain types of disputes.
Registration Procedures
• In future new tenancies will have to be registered within a month, existing tenancies will have to be registered within 3 months of Part 7 of the Act coming into force (i.e. by the 1st of December 2004).
• Landlords currently registered with local authorities must re- register with the PRTB giving details required by the Act but will not have to pay a fee.
• The requirement to register arises only where a new tenancy is created.
• While a revised rent must be updated in the register within a month of taking effect, that notification will not require to be accompanied by a fee. Other relevant changes that occur in the details of the registered tenancy need only be notified as part of a rent review update.
• Tenants must supply landlords with the information they need to complete the registration form, including their Personal Public Service Number.
• The registration fee is currently €90.00 per unit and a composite fee of €375.00 is available where a number of units in the one
property are being registered at the same time.
• There are exceptions in certain limited circumstances i.e. 2 fees already paid in respect of the dwelling within the previous year.
• A double fee applies for late registrations.
• In a case where a tenancy lasts for 4 years, a new registration application and fee will apply where a further Part 4 tenancy commences immediately afterwards.
• The fees will keep pace with inflation.

Other Registration Functions of the PTRB
• The PTRB will exchange data on tenancies with local authorities and the Department of Social and Family Affairs and will provide particulars to he Revenue Commissioners as requested.
• The PTRB will rigorously pursue compliance by landlords with the registration requirement. Failure to do so is an offence and the penalty on conviction is a fine of up to €3,000 or up to 6 months imprisonment or both.
• Landlords must be registered in order to avail of the PRTB dispute resolution service.
• Tenants will have access to the service irrespective of whether or not the tenancy is registered.
• When registered, the PTRB will issue the landlord and tenants with a registration number.
• An extract from the register will be available to the public.
It will not contain information that would disclose the identity of the landlord or tenant or the rent.

Private Residential Tenancies Board (Part Eight)
The Private Residential Tenancies Board will be established as a statutory body. As well as its dispute resolution and tenancy registration functions, the Board will review the operation of the legislation and provide policy advice, research and information on the sector. Queries regarding these functions or in relation to the legislation generally can be addressed to the Private Residential Tenancies Board

Other Provisions

Long occupation equity leases

The Act provides for the abolition, 5 years after the commencement of Part 4 (i.e. on 1 September 2009) of the entitlement to apply, for the first time, for a long occupation equity lease under the 1980 Landlord and Tenant Act. It allows a voluntary renunciation option in relation to the entitlement during those 5 years. An information note containing further details regarding the changes in relation to long occupation equity leases is available on request from the PRTB or from the Department of the Environment, Heritage and Local Government, Custom House, Dublin 1.

Management of apartment complexes

The Act gives tenants certain rights in relation to management companies of apartment complexes. Management companies will be identified in tenancy registration details. Landlords are required to convey tenants’ complaints to the management company, which must have regard to the complaint and furnish the landlord with a written statement, which must be forwarded to the tenant, of steps taken to deal with the complaint. Tenants may request the management company to supply written particulars of service charges and how they were calculated and the company must comply to the extent that it would be obliged to comply with such a request from apartment owners.

Anti-social behaviour – local authority powers
Local authority powers under the Housing (Miscellaneous Provisions) Act 1997 to deal with anti-social behaviour in their estates have been strengthened. Excluding order powers, whereby the District Court can exclude individuals engaging in anti-social behaviour from social housing dwellings or areas, have been extended to occupants of tenant-purchased homes (other than the owner). Existing powers to refuse sale of local authority housing on grounds of anti-social behaviour have also been applied to sales under affordable housing and shared ownership schemes.

Penalties
The penalty applicable on conviction for an offence under the Act is a fine of up to €3,000 or 6 months imprisonment or both and up to 250 per day where the offence continues after conviction. The fines for conviction of an offence under the Housing Acts relating to standards or rent books have also been increased to these levels.

Technical provisions and miscellaneous amendments
Part 9 of the Act contains a number of other ancillary technical provisions and consequential amendments to specific provisions in housing and landlord and tenant legislation.
Implications for leases and tenancy agreements generally The provisions of the legislation will need to be reflected, as appropriate, in any future tenancy agreements, leases, etc. Tenancy agreements or leases can provide for matters not dealt with in the Act. However, in relation to matters that are covered in the Act, a tenancy agreement or lease cannot take away from rights and obligations provided for in the Act and if it purports to do so, that provision is rendered void. The landlord or tenant cannot contract, or be contracted, out of the rights or obligations of the Act.
• The Act allows for leases to provide greater security of tenure for tenants, and allows leases to specify longer notice-periods. However a lease cannot detract from the security of tenure measure specified in the Act. A landlord and a tenant can agree shorter notice periods, but only at the time the tenancy is being terminated.
• The PRTB’s function in dealing with disputes relating to tenant or landlord tenancy obligations also includes obligations of a tenancy agreement or lease not specified in the Act.
• A tenant’s right to request a rent review annually cannot be contracted out in a lease.
• Notwithstanding the existence of a fixed term tenancy and despite anything to the contrary in a lease or tenancy agreement, where a landlord withholds consent to assignment or sub-letting, the tenant may terminate the tenancy.
Accommodation Standards and Rent Books
Local Authorities continue to have responsibility for the enforcement of the Regulations under the Housing Acts relating to rent books and standards of private rental accommodation.

Commencement Schedule
The Act will come into operation on a phased basis, as follows:
1st September 2004: Parts 1, 4, *5, 7, *8 & *9. November/December 2004: Parts 2, 3 & 6 and remaining
sections
* Other than sections 71, 72, 151(1), 182, 189, 190, 193(a) and (d), and 195 (4) and (5)

Useful Links

Below are some links to external websites that you may find useful or relevant….

Property Taxation
NPPR
NPSRA
Dublin City Rates
Valuation Office

Property Professional Associations
SCSI
IPAV
IPFMA
RIAI
Engineers Ireland

Tenant Resources
PRTB
Threshold
Rent Supplement
Consumer Property

Landlord Resources
IPOA
Irish Landlords Forum

Utilities

Power & Gas
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Airtricity

Communciations
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O2

Waste
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Oxigen
Key Waste
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Local Authorities
Dublin City Council
Dun Laoghaire Rathdown County Council
South Dublin County Council
Fingal County Council

Property Market
Daft
My Home
The Irish Times Property Section

Property Commentary
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Irish Property Watch
Daftwatch

Multi Unit Development Act 2011

The following explanatory memorandum on The Multi-Unit Developments Act 2011 was published by the Department of Justice and Law Reform in March 2011.

The Multi-Unit Developments Act 2011 seeks to address problems relating to the ownership and management of the common areas of both existing and new multi-unit developments, and to facilitate the fair and effective management of bodies responsible for the management of such areas.

The Multi-Unit Developments Bill 2009 was extensively amended in the course of its passage through the Oireachtas and this revised Explanatory Memorandum outlines the provisions of the Act as passed.

Provisions in the Act

Section 1 is a standard provision containing definitions of terms used in the Act.
“Common areas” are defined as those parts of a development designated as common areas including all relevant structural parts of a building such as walls, foundations, roofs, halls, landings, lifts, liftshafts, staircases and passages. They also include all access roads, footpaths, kerbs, landscaped areas, boundary walls, architectural and water features, as well as ducts, conduits, cisterns, tanks, sewers, pipes, drains, wires and central heating boilers which are used to serve more than one unit in a development.
“Development stage” means the period beginning when the first unit is made available for sale and concludes when all construction and ancillary works have been completed in accordance with any planning permission granted under the Planning Acts and with any requirements under the Building Control Acts. In the case of new developments the contract agreed between the developer and the owners’ management company must also be completed.
“Mixed-use multi-unit development” is defined as a multi-unit development in which a commercial unit(s) forms part of the development.
“Multi-unit development” means a development being land on which there stands a building or buildings comprising units where it is intended that the units share amenities, facilities and services and where the development contains not less than 5 units intended for residential use.
“Owners’ management company” means a company established under the Companies Acts for the purpose of becoming the owner of the common areas of a multi-unit development and for managing, maintaining and
repairing such areas. For the purposes of imposing certain requirements of the Act on existing owners’ management bodies which are not companies, subsection (3) provides that reference to an “owners’ management company” shall include reference to an industrial and provident society, a partnership or unincorporated body or a group of persons which own the common areas of a multi-unit development.
“Relevant parts” means the parts of the common areas of a multi-unit development which are necessary for the quiet and peaceful occupation of units.
“Unit” means a unit designed for use and occupation as an apartment, flat or other dwelling. Subsection (2) provides that a unit shall not be considered as intended for residential use unless it has self-contained cooking and bathroom facilities for the exclusive use of the occupants.
“Unit owner” means the person (other than the developer or owners’ management company) who holds the highest freehold or leasehold estate or interest in a unit.
Subsection (5) provides for the use of proxy voting in owners’ management companies while subsection (6) makes it clear that it is permissible, in a phased or mixed use multi-unit development to have separate owners’ management companies for different phases or different classes of units.
Section 2 deals with the scope of the Act. Subsection (1) provides that the provisions specified in Schedule 1 shall apply to smaller developments containing two or more residential units but less than 5 residential units. Subsection (2) provides that provisions set out in Schedule 2 will apply to multi-unit developments consisting solely of houses, whether detached, semi-detached or terraced, but which have an owners’ management company structure.
Subsections (3), (4) and (5) relate to mixed-use multi-unit developments. Subsection (3) provides that, subject to subsection (4), the Act shall apply to residential units and commercial units in the development, to the extent that amenities, facilities and services are shared by such commercial units and residential units.
Subsection (4) provides that, in situations where more than one owners’ management company exists in a mixed use development (i.e. where one company exists for residential units and one for commercial units), the obligations on such companies will be met where the provisions in the Act with respect to annual reports and meetings, annual service charges and contributions to the sinking are applied in a fair and equitable manner.
Subsection 4(b) provides that owners’ management companies in mixed- use developments will be deemed to have complied with the provisions of voting rights provisions where the voting rights of the members are apportioned in a manner which is fair and equitable. Subsection (6) specifies that for the purposes of ensuring that such matters are dealt with fairly and equitably, account must be taken of all relevant matters including the level of use of the common areas by the different classes of units.
Subsection (5) specifies that except where otherwise provided, the Act will apply to all multi-unit developments, i.e. existing and future developments. The exceptions are sections 3 and 14 which will apply to future developments.
Section 3 imposes conditions on the sale of units in new multi-unit developments.
Subsection (1) provides that such a unit shall not be sold unless an owners’ management company has been established at the expense of the developer and ownership of relevant parts of the common areas have, subject to subsection (7), been transferred to that company. A certificate from a suitably qualified person regarding compliance with fire safety in the development must be supplied by the developer. Subsections (8) and (9) define the meaning of “suitably qualified person” and allow the Minister to make regulations on the matter.
In addition, the developer must enter into a contract with the owners’ management company which outlines the responsibility of the developer to the owners’ management company and vice versa and which will deal with issues such as compliance with statutory requirements, completion of the common areas, retention money and dispute resolution. Subsection (6) provides that the owners’ management company must have separate legal representation in relation to the negotiation of the contract.
Subsection (2) provides that the section applies to developments in which a unit has not yet been sold.
Subsection (3) provides that transfer of the common areas will oblige the developer to transfer the rights and amenities necessary for the reasonable use and peaceful occupation of the units.
Subsection (4) places an obligation on the developer to do all things within his or her power which are reasonably necessary to ensure the unit owner enjoys the rights referred to in subsection (3). Subsection (5) makes it clear that the owners’ management company established must have all necessary powers to perform any functions conferred on it by this Act.
With a view to ensuring that the developer is not relieved of responsibility for completion of the common areas as a result of the transfer of their ownership to the owners’ management company, subsection (6) provides that the transfer of the common areas is subject to retention of the beneficial interest by the developer. Transfer of the retained beneficial interest upon completion is provided for in section 11 (see below).
Section 4 deals with existing multi-unit developments in which a residential unit has already been sold but the common areas have not been transferred to the owners’ management company. In such cases, the developer must transfer ownership of the relevant parts of the common areas to the owners’ management company within 6 months. Subsection (2) provides for retention of the beneficial interest pending completion of the relevant common areas.
Section 5 deals with completed or substantially completed multi-unit developents in which the common areas have not been transferred to the owners’ management company. It obliges the developer to transfer ownership of the relevant parts of the common areas of such developments to the relevant owners’ management company within 6 months of the coming into operation of the section. The transfer to the owners’ management company is not subject to the retention of the beneficial interest. Subsection (2) defines “substantially completed” in the context of the section as being where sales of not less than 80% of the residential units have been closed.
Section 6 provides that an owners’ management company shall join in a deed of conveyance or transfer relating to a residential unit in the development in order to ensure that a good marketable title will vest in the purchaser of that unit.
Section 7 makes it clear that the transfer of ownership of common areas does not relieve a developer of his or her responsibility for completing the development, including compliance with the requirements or conditions of planning permission under the Planning and Development Acts and standards under the Building Control Acts.
Section 8 provides that whenever ownership of a residential unit in a multi-unit development is sold or assigned, membership of the relevant owners’ management company shall transfer to the purchaser without the need to excute a transfer or have it approved by the directors of the company. The owners’ management company will be obliged to furnish the purchaser with a share or membership certificate as soon as practicable following notification of the change of ownership. It must also ensure that the register of members is updated and comply with other relevant requirements under the Companies Acts. Subsection (3) places an obligation on a unit owner to provide the owners’ management company with details of his or her address and any other contact details. The unit
owner is also required to notify the owners’ management company of any changes to those details.
Section 9 outlines the consequences of transfer of common areas in a multi-unit development. Subsection (1) provides that the developer shall retain rights to pass and re-pass over such areas in order to complete them. There must be a valid insurance policy in place in respect of all risks relating to the developer’s use or occupation of the multi-unit development (subsection (3)) and the developer must also indemnify the owners’ management company against claims made against it in respect of acts or omissions by the developer in the course of completion works (subsection (2)).
There will be a general obligation on the developer to minimise inconvenience to the unit owners and ensure that access is available to them at all reasonable times. Subsection (6) provides that the owners’ management company must not obstruct the developer in exercising any rights in relation to the multi-unit development or adjoining land.
Section 10 is intended to deal with cases in which ownership or an interest in or responsibility for the maintenance and management of a part of a multi-unit development which is commonly held by a owners’ management company is held instead by an individual unit owner. In such cases, subsection (1) provides that the unit owner and the company may agree to the transfer ownership of that interest and responsibilty to the company.
Subsection (2) provides that any such agreement will be subject to approval at a general meeting of members of the company. Subsection (3) provides that where either party considers that consent to the transfer is being unreasonably withheld, they may make an application to the court under the dispute resolution mechanism in section 24 (see below).
Section 11 provides that where a multi-unit development has been completed, the owner of the beneficial interest in the common areas must, as soon as practicable after completion, make a declaration for the benefit of the owners’ management company stating that the beneficial interest stands transferred to the owners’ management company and that the beneficial and legal interests stand merged.
Subsection (2) provides that the declaration must be made with the consent of any mortgagee or owner of a charge on the property and that the consent may not be unreasonably withheld. Subsection (3) contains conditions in relation to such consent.
Section 12 provides for the possible merging of the beneficial and legal interests in advance of completion of a development. Subsection (1) provides that where 60% of the owners of residential request the beneficial owner to make a statement that the beneficial interest stands transferred
to the owners’ management company and that the beneficial and legal interests stand merged, such owner shall make that declaration unless good and sufficient cause is shown (subsection (4) provides that good and sufficient cause can include a reason that the granting of the declaration would interfere with the completion of the entire development).
Subsection (2) provides that any declaration shall be made with the consent of any mortgagee or owner of a charge on the land and that consent may not be unreasonably withheld. Subsection (3) contains conditions in relation to such consent. Subsection (5) provides that any dispute as to whether good and sufficient cause has been shown as to why a declaration should not be made under subsection (1), may be the subject of an application to court under the dispute resolution mechanism in section 24.
Section 13 makes it clear that an owners’ management company shall have a right to carry out repairs or maintenance on a part of a multi-unit development which is not within its control where the repairs are reasonably necessary to ensure the safe and effective occupation or the peaceful enjoyment of occupation of any unit. However, subsection (2) provides that the company shall not carry out such repairs until the person who has responsibility for carrying out the repairs has been requested to do so and has been afforded a reasonable opportunity to carry out the repairs.
Subsection (3) states that subsection (2) shall not, however, apply in emergency cases. Subsection (4) provides that the owners’ management company may recover the costs of carrying out such repairs or maintenance from any person (including the developer) who had resposibility for carrying out the repairs or maintenance.
Section 14 makes provision for voting rights in owners’ management companies established after the commencement of the Act (subsection (4)).
Subsection (1) specifies that one vote shall attach to each residential unit in a development and that no other person shall have voting rights, while subsection (2) provides that each vote shall be of equal value. Subsection (3) provides that the words “owners’ management company” – which may be abbreviated to “OMC” – must be included in the name of any such owners’ management company. Subsection (5) provides that the section applies to mixed-use developments subject to the provisions in section 2(4) of the Act.
Section 15 relates to voting rights in owners’ mangement companies in existing developments. Subsection (1) defines the scope of the section in that it applies to existing developments which are not mixed-use developments. Subsection (2) provides that the voting rights of such developments shall, in line with the general rule in section 14, be one vote
per unit and that no other person shall have a vote. In situations where the current voting structure does not meet this criterion, any person wishing to exercise other voting rights (weighted voting, golden share etc.) must apply for and receive authorisation from the Circuit Court to do so (subsection (3)). In making a decision on any such application, the Court, before making an order, must be satisfied that the person concerned has an essential economic interest and the voting right concerned is required to adequately protect that interest or that the court considers it necessary in the interest of fairness or justice to allow the person to exercise that voting right (subsection (4)).
Section 16 deals with the issue of life-long or long-term directors of owners’ management companies. In certain circumstances, directors appointed by a developer are entitled to remain as directors for life. The section provides that this shall not be permitted after the coming into operation of the section. A director shall not be permitted to have a term exceeding 3 years in the first instance. Where such a situation exists at present, the director must relinquish the position within 3 years of the coming into operation of the section.
Section 17 imposes specific obligations on an owners’ management company. Subsection (1) provides that the owners’ management company shall prepare an annual report and shall hold a meeting at least once a year to consider the report. Subsection (2) outlines various matters to be addressed in that report. They include details of income and expediture, and assets and liabilities; the annual service charges and sinking fund account; planned expenditure on maintenance and repair; insurance cover and contracts entered into by the company.
Advance notice of the meeting must be given to each member 21 days before the meeting (subsection (3)) and a copy of the annual report must be provided at least 10 days beforehand (subsection (4)). Subsection (5) provides that the annual general meeting must take place within reasonable proximity to the multi-unit development unless otherwise agreed in writing by 75% of the members of the company. Subsection (6) makes it clear that the obligations outlined in this section are in addition to any other obligation or duty of the company under any Act, statutory instrument or rule of law.
Section 18 provides that the owners’ management company must establish a scheme for annual service charges to fund expenditure on the maintenance, insurance and repair of common areas within its control and for the provision of common services (security, legal, accounting etc.) to unit owners.
Subsection (2) provides that any such charge shall be approved by a general meeting of the members of the company, while subsection (3) outlines the categories of expenditure which must be itemised the scheme
of charges. Subsection (4) provides that in any case in which over 75% of the members do not approve the proposed charge, the existing charge shall remain in place until adoption of a new charge. Subsection (5) provides that where no service charge applied in the previous period, the directors may determine a scheme to operate for a period of 4 months. Subsection (8) provides that an owners’ management company may set the initial annual service charge for a development without the holding of a meeting.
Subsection (6) provides that the service charge shall not be used to defray expense on matters which are the responsibility of a developer or builder unless agreed in writing by 75% of the members of the company. Subsection (9) provides that where expenditure is incurred under subsection (6), the owners’ management company may recover it from any person (including the developer).
Subsection (7) provides that any approval of such expenditure is conditional on 65% of the units being sold and can only come into effect 3 years after the transfer of ownership of the common areas to the owners’ management company. Subsection (9) places an obligation on a unit owner, including the developer, to pay the annual service charge in the case of unsold units (subsection (10)). Subsection (11) sets out the date from which the developer is responsible for the service charge for unsold units.
Subsection (13) provides that the annual service charge must be calculated on a transparent and fair basis. Subsection (14) sets out conditions in relation to the setting of the charge, while subsection (16) will permit any excess to be diverted to the sinking fund. Subsection (15) requires owners’ management company to maintain proper records of expenditure for auditing purposes. Subsection (17) provides that the Minister for Justice and Law Reform may make regulations regarding the class or classes of expenditure which may be the subject of service charges
Section 19 provides that an owners’ management company must establish a sinking fund for the purpose of spending on refurbishment, improvement or maintenance of a non-recurring nature of the multi-unit development and that unit owners will be obliged to make contributions to it (subsection (3), including developers in the case of unsold units (subsection (4)). Subsection (5) provides that the amount of service charge shall be €200 per annum or such other amount as may be agreed by the members.
Subsection (6) provides that the sinking fund must be established within 3 years of the transfer of ownership of a unit in the devleopment or, where a development is already in existence on the coming into operation of the section, within 18 months of that date. Subsection (7) provides that contributions to the sinking fund shall be held in a separate identified account. Any disputes in relation to the sinking fund may be the subject of an application to court under the dispute resolution mechanism in section
24. Subsection (9) provides that the Minister for Justice and Law Reform may make regulations regarding the class or classes of expenditure which may be the subject of service charges, the procedures to be followed in the setting of the contribution and the levying and payment of the contribution.
Section 20 provides that the provisions contained in section 19 regarding sinking funds (other than the obligation to establish the fund) shall apply to traditional type housing estates which have an owners’ management company structure and which already have a sinking fund.
Section 21 provides that the owners’ management company may issue an aggregate request for payment under sections 18 and 19. Such a request must outline the basis for the calculation of each charge.
Section 22 provides that service charges or sinking fund contributions may be recovered by the owners’ management company as a simple contract debt.
Section 23 provides that an owners’ management company may make House Rules for the effective operation and maintenance of the multi-unit development. The Rules must be consistent with any covenants or conditions contained in the documents of title (subsection (2)) and have the objective of advancing the quite enjoyment of the unit owners and achieving a fair balancing of the rights of such owners (subsection (3)).
House Rules must be agreed by a meeting of members of the owners’ management company (subsection (4)) and notice of such meeting must be given to members at least 21 before the meeting together with a copy of the draft rules (subsections (5) and (6)). When House Rules are made, a copy shall be given to unit owners by the owners’ management company (subsection (7)).
Subsection (8) provides that the owners’ management company can mke the initial house rules for the development prior to the sale of the first residential unit. Subsection (9) provides that House Rules may be amended in the same manner as they are made. Where a unit is let, it shall be a term of the letting that it is subject to the observance of the Rules by the tenants (subsection (10)). The Rules may make provision for the recovery by the owners’ management company from any person of the resonable cost of remedying a breach of the rules (subsection (11)). Subsection (12) provides that the Minister may make regulations concerning the making of rules and the matters to which thay may relate.
Section 24 establishes a court jurisdiction for the resolution of disputes in relation to multi-unit development. Subsection (1) provides that a person (as defined in section 25), may apply to for an order to enforce any rights conferred or obligation imposed under the Act. For the sake of clarity,
paragraph (b) provides that an application to court may be made in relation to any matter to which reference to making an application under this section is made in this Act.
Subsection (2) provides that an application under the section shall state the circumstance giving rise to it and details of the order or orders requested. The applicant must also state whether mediation has been attempted. Subsection (3) provides that the court, in the case of applications under subsection (1)(a), if satisfied that a right has been infringed or an obligation has not been discharged, may make such order or orders as it deems appropriate. Subsection (4) provides that where subsection (1)(b) applies the court may make such order as it considers just and equitable.
Subsection (5) outlines the various types of order that may be made by the court, while subsection (6) provides that the court must be satisfied that all parties likely to be affected by the making of an order have received sufficient notice of the application. Subsection (7) allows the court to make such ancillary orders as it considers necessary to give effect to any order or orders made by it under subsection (3).
Subsection (8) provides that where arising from an order under this section a deed is required to be executed, each owner in the development shall be furnished with a certified copy of the deed. Subsection (9) provides that the court may make an order regarding the voting rights of an owners’ management company where it considers those rights are not established on a fair and equitable basis.
Section 25 defines the persons who may apply for a court order under section 24. They include the owners’ management company; a unit owner; any trustee under a will, settlement or other disposition of land by such owner; the developer; or such other person as the court sees fit.
Section 26 provides that the Circuit Court will have exclusive jurisdiction to hear and determine an application under section 24.
Section 27 provides that the court may, upon its own motion or at the request of any party to an application under section 21, at any stage during the course of the proceedings, direct the parties concerned to discuss and attempt to settle the matter in a ‘mediation conference’. Subsection (2) provides that where such a conference is directed by the court, all parties must comply with the direction. Subsection (3) deals with the holding of the mediation conference, while subsection (4) deals with the appointment of a chairperson. Subject to section 28, all notes of the chairperson shall be confidential (subsection (5)). Subsection (6) deals with costs associated with the holding of the conference.
Section 28 provides that the chairperson of a mediation conference must submit a report to the court on the outcome of the conference. A copy of the report must also be given to the parties to the application. Where the court is satisfied that a party to the application did not comply with a direction to engage in the mediation process it may make an order as to costs.
Section 29 is a saver provision which provides that nothing in the Act shall derogate from any power vested in any person or court, by statute or otherwise and the powers conferred in the Act shall be in addition to and not in substitution for any such powers.
Section 30 addresses the problems which arise when an owners’ management company is struck off the Companies Register for non- compliance with reporting requirements. It provides for an extended period during which such a company may be restored to the Register. At present, a company that has been struck off has a period of one year within which to provide the Registrar with the relevant information and accounts. Thereafter application for restoration must be made in the High Court. Section 30 provides that the period of one year is extended to 6 years in the case of owners’ management companies. When restored to the Register, it shall be deemed to have continued in existence as if it had never been struck off. Each application for restoration must be accompanied by a certificate from a solicitor or accountant to the effect that the company is operating as an owners’ management company.
Section 31 provides that the benefit of any guarantees or warranties relating to any materials used in the construction repair or improvement of a multi-unit development shall stand transferred to the owners’ management company on the transfer of the land. Subsection (2) provides that on completion of a multi-unit development, a developer shall furnish to each owners’ management company concerned the documentation specified in Schedule 3.
Section 32 places restrictions on owners’ management companies entering into long term contracts with providers of goods and services. Such companies will not be permitted to enter into contracts for a period in excess of 3 years. In addition, any contract entered into by the company cannot include a clause imposing a penalty on the compnay if the contract is terminated after a 3 year period.
Section 33 specifies that the regulation-making powers conferred on the Minister for Justice, Equality and Law Reform shall be exercised in consultation with the Minister for Enterprise, Trade and Innovation and the Minister for the Environment, Heritage and Local Government.
Section 34 is a standard provision relating to the short title and commencement of the Act.
Schedule 1 to the Act specifies the provisions of the Act which apply to multi-unit developments comprising more than 2 units but less than 5 units to which reference is made in section 1(3).
Schedule 2 relates to developments which consist solely of traditional housing units but which have an owners’ management company attached. The majority of the provisions of the Act will apply to such developments.
Schedule 3 specifies the documentation to be provided by the developer to the owners’ management company on completion of the development.

Department of Justice and Law Reform March 2011